Signs that Chinese coal markets are going bad.

There’s mounting evidence that the Northwest coal export plans are on shaky ground in no small part because of what’s happening in China.

China, which accounts for about half of the entire world’s annual coal consumption, is also the world’s top importer. To a very large extent China drives the global coal trade. But as a flurry of recent news accounts reveal, China’s demand for coal is weakening—and it’s sending shockwaves throughout the industry.

China had exceeded its ambitious emissions targets, cutting coal-fired generation by more than 7 per cent in the past year. A rapid expansion in hydroelectricity, wind, biomass, solar and nuclear power had pushed down coal’s share of energy production from 85 to 73 per cent.

Competition from natural gas. As in the United States, China’s age-old coal habit appears to be under threat from natural gas. Natural gas imports from Central Asia are up by a third, year over year, while high prices suggest strong demand. Meanwhile, China is poised to get into shale gas in a big way with scores of companies bidding on domestic exploration rights. What’s more, Reuters reports that China is exploring coal gasification in remote parts of the country.

There’s an object lesson here, one that history should have already taught the West Coast. Twice before—in Portland and Los Angeles—communities gambled that a supposedly insatiable Asian demand for coal would justify big new export terminals.

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